The entity asks: “Does this mean we now need to have our plan audited as part of our Form 5500 filing process?”
David Levine, Groom Law Group, answers:
There are four key requirements that must be satisfied to be exempt from the Form 5500 audit requirement:
- First, as least 95% of a plan’s assets must be “qualifying plan assets” or meet otherwise applicable bonding requirements. Many 403(b) plans satisfy this requirement.
- Second, a plan’s “summary annual report” provided to participants and beneficiaries must contain additional disclosure information that advises participants and beneficiaries of the exemption described above.
- Third, on demand, certain information about the qualifying plan assets and a fidelity bond meeting the exemption described above must be provided without charge on request to a participant or beneficiary.
- Fourth, the number of participants, as of the beginning of the plan year, reported on the plan’s current Form 5500 must be between 80 and 120; and, the plan must have filed a Form 5500 as a small plan filer for the prior plan year.
In your case, if you satisfy all four requirements, you should be able to avoid having to complete an audit for your 2010 plan year. We recommend that you carefully review these requirements with your advisers to ensure they are satisfied before deciding that an audit is not necessary.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.